More Market Correction to Come? Ask Mr. PMI

Investors may be focused on earnings right now, but the flash PMI numbers are about to steal the spotlight. And so "Lloyd's Wall of Worry" continues to expand.

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Well, let's chalk last week up as one of the worst in US history and try to move on -- emphasis on "try." The Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) all finally joined the broader market confirming that a correction is underway. Except, of course, in Japan where the NIKKEI (INDEXNIKKEI:NI225) is now up over 30% in anticipation of QE East fixing 20 years of economic mismanagement quickly -- emphasis on "quickly."

While the headline noise around stocks is all about earnings, waiting in the wings are the flash PMI numbers, due out Monday night and Tuesday morning. PMI stands for Purchasing Managers Index and flash lets us know that it's an estimate (and subject to change -- or in the vernacular, subject to be wrong). We care because it is an early economic indicator of business ordering and pricing collected from many different industries. We also care because when economic growth is in question, we will ingest and digest any piece of news that gives us even a whiff of insight about commerce. Let's hope the flash PMIs out of the US, Europe, and China delight our senses.

After the unfortunate yet necessary addition of terrorism to the Wall last week, we remain at twenty-six worries as commodity and deflation fears blindsided us and replaced waning concern about the UK and Argentina. Lots of deck chair movement lately. Keep your life vest on just in case.

Welcome to my at-a-glance guide to the issues facing investors this week -- a unique tool for traders and money managers.

Typically the term "wall of worry" refers to the entire body of concerns influencing stock market action. When the wall is high, meaning the market is nervous, stocks tend to get cheaper.

This wall of worry is even more specific. Every week I list the exact concerns in the marketplace and use the list to help me make buying and selling decisions. As I like to say, "Buy fear, sell cheer."

In other words, once the the wall rises above 15 blocks, start looking for deals. If the worry count sinks below 10, consider selling; prices have likely peaked.

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